SHARE prices on Bursa Malaysia traded mostly mixed last week. Investors alternated between bouts of bullishness and caution, leaving the benchmark index flat. The KLCI ended Friday at 1,044.1 points, down just 1.2 points or 0.1% for the week.  

The two-month long rally showed little sign of abating, fuelled by increasing optimism over the likelihood of a recovery in the US and global economies. Many Asian bourses, notably Japan and Hong Kong, ended at their highest levels in eight months.  

Investor confidence has been bolstered by a series of better-than-expected economic data. Optimism tends to feed on itself, and is already showing up in stronger growth in consumer confidence and spending. Last week saw a number of economic reports from the US, that were mostly better than expected, notably consumer confidence for May.

The week started off on a positive footing for Bursa Malaysia. However, overall sentiment turned a little more cautious as the week drew on, as investors awaited fresh leads.

On Wednesday, the government announced a much larger-than-expected first-quarter gross domestic product (GDP) of 6.2% contraction for Malaysia. The government has since revised its full-year GDP contraction forecast for 2009 to minus 4%-5%. Investors reacted negatively, sending the KLCI lower on Thursday, albeit on very thin volume, but the market promptly recovered on Friday.  

On the positive note, there has not been significant selling pressure. Indeed, the trading volume on Thursday - totalling 1.08 billion shares - was one of the lowest since the rally started. Most indices and stocks are still holding on to most of their gains from the past two and a half months. This suggests that whilst there is a renewed sense of wariness investors are still confident that the current uptrend is not about to reverse.

There is also optimism that the worst has already passed and the coming quarters should look better. Thus, the official contraction forecast could well be overestimated as the recovery gains strength. By and large, this view was also confirmed by a large number of the companies under our coverage - particularly for manufacturing and property firms.

Commodity prices have also rallied sharply, led initially by edible oils and now crude oil. Crude oil prices rose strongly in the past week, rising to above US$65 (RM227.50) per barrel as the market adjusted to shrinking supplies after a spate of rising inventories earlier that depressed prices. Last week, US oil inventories fell for the third consecutive week.
 
The crude oil rally also fuelled further gains for crude palm oil, which stayed above RM2,500  per tonne, as palm oil tends to move in tandem with crude oil.

Some industry observers predict palm oil prices could even go beyond RM3,000 per tonne in the short term on the back of tight global supply of edible oils and oilseeds - and also if crude oil crosses US$70 per barrel. Malaysia's palm oil stockpile fell to 1.29 million tonnes at end-April 2009, down from as high as 2.27 million tonnes at end-November 2008.

Portfolio review
Our model portfolio performed very well last week, outperforming the benchmark index by a very wide margin. Our basket of 18 stocks surged 3.5%, compared with the KLCI's 0.1% decline. Including our large cash reserves (for which no interest is imputed), the total portfolio value gained by 2.3% to RM465,784.

Our model portfolio's total value and returns represent a significant achievement compared with our initial capital of just RM160,000. We started the model portfolio on March 3, 2003.

Our total profits are very substantial at RM305,784, of which RM206,221 have already been realised earlier. This represents a hefty return of 191.1% compared with our capital of RM160,000. We continue to outperform the KLCI significantly, which is up by 61.4% in the same period.

Of our 18 stocks, 14 stocks rose last week, two were unchanged (Selangor Properties and 3A resources) and two stocks fell - Tanjong plc and Dijaya, down 3.6% and 1%, respectively.

Four of our stocks chalked up double-digit weekly gains, namely Tanjung Offshore and its warrants (up 12.3% and 29.7%, respectively), Notion VTec (up 17.6%) and Pantech (up 10%).  

Tong Herr's shares traded ex for a five sen dividend, which we have adjusted accordingly.

Buying HELP shares
We are increasing our stake in HELP International Corp, and buying 15,000 more shares at Friday's closing price of RM1.30. This will increase our stake in HELP to 25,000 shares, at an average cost of RM1.324 per share.

After this purchase, the portfolio's equity weighting will rise to 72%, and we will still have RM130,696 cash for future purchases.  

HELP is one of Malaysia's leading providers of education services and is highly regarded for its academic quality and innovative products. Its earnings are relatively resilient and recession-proof, and the company has a very strong balance sheet and business franchise.

In the current challenging environment, it is rare to find companies that continue to grow from strength to strength. HELP is one very rare exception, with continued double-digit earnings growth even in the current climate.

HELP's strong brand name has helped to expand its student base, extend its presence overseas and increase the appeal of its own home-grown degrees. From just 8,600 students in October 2007, the group now has about 11,500 students, excluding over 1,000 students studying for HELP accredited courses overseas through franchising arrangements.

The group has been growing its student base through acquisitions and new colleges (HELP-ICT and soon, the new campuses at Fraser Business Park and later, Subang 2), organic student growth (through its strong branding, academic standing and new courses) and overseas tie-ups.

HELP's home-grown degrees, granted under the "HELP University College" brandname are also gaining popularity - not just locally but abroad as well. The group was awarded "University College" status in 2004, enabling it to design and award its own degrees. The shift towards more home-grown degrees has helped improve overall margins.

Its overseas ventures in Vietnam, Indonesia, China and Saudi Arabia are also taking off well. Its ability to penetrate the international market is a strong testimony to the HELP brand.

We expect net profit to rise 21.1% to RM14.3 million in FY09. Price to earnings (P/E) valuations are very low at 8.1 and 7.4 times for FY October 2009-10, which are very attractive for a company with strong fundamentals, balance sheet and branding, and favourable growth prospects.

HELP's balance sheet is very solid. Net cash totalled a sizeable RM73.4 million in January 2009, which is equivalent to a significant 82.6 sen per share - or 64% of the current share price.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.